Linking entails allowing emission credits from one scheme to be rendered tradable in another. For example, European credits would be valid and tradable in California, and vice-versa. Beyond allowing the carbon market to become more efficient and liquid, linking could also present a range of arbitrage opportunities.

For all of you environmental markets fiends out there, I would definitely recommend this paper. It's short (13 pages) and gives a good overview of where things are currently at with emissions trading and the possibilities associated with linking.